FTSE Russell’s Shariah compliant suite of indices

Shariah indices are built to conform to the moral precepts of Islam; this is an industry that is experiencing consistent year on year growth.

    1. Overview
    2. Indices
    3. FAQs
    4. Research and Insights
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    Shariah compliant index solutions

    FTSE Russell’s Shariah compliant indices have been developed in partnership with leading market experts and global exchanges to meet a range of international and domestic Islamic investment needs.

    Our Shariah compliant benchmarks include the FTSE IdealRatings Islamic Index Series, the Yasaar Global Equity Shariah Index Series, the FTSE NASDAQ Dubai Index Series, the FTSE Bursa Malaysia Hirjah Shariah and EMAS Shariah indices, the FTSE SET Shariah Index, the FTSE TWSE Taiwan Shariah Index, the FTSE/JSE Shariah indices, the FTSE SGX Shariah Index Series, and the FTSE Developed Minimum Variance Shariah Index.

    Frequently asked questions

    • Islamic finance differs from conventional (Western) finance in its approach to money: it is based on the belief that money doesn’t have any intrinsic value. Instead, according to Islamic scholars, money should be seen just as a medium for exchanging products and services. Linked to this idea is a ban in Islamic finance on making money from money in the form of interest. Islamic finance also prohibits investment in goods or services seen as harmful. This prohibition covers activities such as the production and sale of alcohol, tobacco and gambling.

    • We have a range of Shariah compliant indices that draw upon the expertise of two different consultants, IdealRatings and Yasaar. Our IdealRatings indices predominantly rely on market cap to ascertain debt levels, whereas our Yasaar indices rely on debt as a percentage of asset value – this can lead to different stock representations in each index series.

    • Shariah indices are indices that are built to conform to the moral precepts of Islam, while this offers indices that are aligned to Islamic beliefs, there is a 5% allowance for non-compliant activities.

    • Investment can be halal as long as it is done in accordance with Shariah law.

    • Companies involved in non-halal business activities will be filtered out as non-Shariah compliant (exceeding 5% of total revenue).

    • The two Shariah compliant asset classes we offer through our index suites are sukuk and Shariah equity.

    • Index clients will have the opportunity to view the Shariah compliant companies which are constituents of our Shariah compliant equity indices.

    • The four sources of Shariah law are:

      1. The holy book (the Qu’ran)
      2. The Sunnah (traditions of the Prophet Muhammad - pbuh)
      3. Ljma (Scholarly consensus)
      4. Qiyas (Analogical reasoning / deduction)

       

    • Our IdealRatings indices predominantly rely on market cap to ascertain debt levels, whereas our Yasaar indices rely on debt as a percentage of asset value – this can lead to different stock representations in each index series. The approach you adopt has the potential to result in different stock exposures.

    • While indices cannot be invested in directly, there are a number of providers that offer investment products linked to our Shariah indices.

    Research and Insights

    Research

    Understanding Shariah Compliant Indexing

    Read and download our research on understanding Shariah Compliant Indexing in which we review this increasingly important part of the world’s financial markets.

    Data and analytics

    Islamic Finance ESG Outlook 2023

    The incorporation of ESG considerations into the operations, offerings, and investments of Islamic financial institutions has gained traction in the last five years.

    Article

    From sustainability to AI, Sukuk reimagined

    In recent years, the Sukuk market has witnessed significant growth, but challenges remain. In our latest insight we delve into the key aspects driving change.

    Article

    Global Islamic finance assets expected to exceed $6.7 trillion by 2027

    The global Islamic finance industry has increased its assets size by 11% to US$4.5 trillion in 2022, according to the recent ICD -LSEG Islamic Finance Development Report.

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